Other Stock Trading Methods

Elliot Wave: What is it?

Elliot Wave is a manner of defining the market action in a five moving ridge formation. A very simple explanation. It basically states mass psychological science is predictable in a liquid market by a five moving ridge cycle. An accretion wave. A correction. A much bigger wave. A rectification again. Then the concluding "speculative" wave. Where the public leaps in. This is the concluding moving ridge and the the adjacent rectification is not rectification as such as but the end of the market cycle.

A image is deserving a thousand words. See the chart of the NASDAQ during the great "bear" of 2001 to 2003

So, looking at the above chart Elliot Wave makes look to throw some credibility. It's is clear the great market clang of 2001 to 2003 did move in an almost perfectly formed five moving ridge cycle. Three moving ridges down. Leg three beingness the biggest and leg five beingness the concluding one. All looks well.

This is what I desire to state about Elliot Wave. In a "nutshell" it makes look to have got some substance. Look at some monthly barroom charts of a liquid market (where there is monolithic populace participation) and you will be able to see some great five moving ridge formations. Great. That's about all the interest I have got in Elliot Wave. There is absolutely nil you can merchandise off. It's not quantifiable. Sometimes you will see Elliot Wave formations, most of the clip you will not. And then it gets worse.

Ask twenty Elliot Wave partisans what they see in the same chart and I'll vouch you will get twenty different answers. How can you merchandise of something so subjective? Why should a market move up in three waves? where's the common sense about this method? I make not see it.

And when an E.W. formation travels incorrect make they state "oh sorry I am wrong. cut your losings and get out"? No. They they convey in extra regulations about a rectification moving ridge within the formation and heap more than and more B*S already onto a sea of B*S and non-sense.

I used to subscribe to an E.W newsletter. It was really interesting to listen to. this market was in this moving ridge and would travel here.. blah,blah,blah.... I didn't do any money from their recommendations. Lost a lot.

Verdict:

Something that mightiness clasp some academic interest if this is what "bakes your potatoes" but beyond the definition about liquid markets moving in five waves... I wouldn't delve any deeper into this. I honestly make not believe you can merchandise from this "theory"

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W.D Gann: What is it?

This isn't a what but a who. WD Gann was a celebrated bargainer who made millions, millions manner back at the bend of the century by predicting hereafter stock market tendencies by using the brilliant Gann Angle System. Just believe for a few hundred dollars many sellers are willing to allow you happen the "Gann Secrets" and assist you do billions in the stock market. Drop everything.. we have got establish the Holy Place Grail of stock trading.

Back to reality. Gann ..... bash your-self A favour and make not even blow your clip in this area. For one it is a method that attempts to "predict" the future. ANY method that makes this, in my eyes, should not even be considered. But here are some lurid facts about the so called brillaint WD Gann and his astonishing method.

The Gann method is about measurement incline of tendencies to foretell reversals in those trends. It's fancy. It can look great on "cherry picked" past charts. But foretell the future.... it can not do!

You must read William Gallacher's book: "Winner Takes All", It is some clip since I read it and make not have got a transcript here right now but I always retrieve the subdivision on the Gann Method. His boy was interviewed for a place at a bank and the conversation of his male parent (the Great W.D. Gann) came up. It went something like this:

Interviewer: So what happened to all those billions your male parent made in the stock market?"

Son of Gann: "He never left us millions. He left us $50,000 ( make not quote me on this.. it was a low figure). My male parent was a failure trading the stock market. Although he did o.k. merchandising his trading materials."

There was a spot more to it than that but read the book for your-self and have got a laughter at all those so called "Gann" experts selling trading methods based on a method whose conceiver never made any money from.

Here is another fact about Gann... I read in the Market Wizards two book the Interview with William Eckhardt (p.110 / p.111) , and believe me if the top, professional bargainers talking about Gann trading methods in this way, you make not desire to be cachexia your clip on it.

Eckhardt: "If you wanted your computing machine system to be cognizant of slope, you would have got to programme this characteristic into it. At that point, it would go abundantly clear that the incline value depends directly on the pick of units of measurement and scales of measurement for the clip and terms axes"

My comment: Basically he is saying in non mathematical language.. Gann angles for trading are too subjective.

Jack Schwager: I have got always been astonied by how many people are unmindful to the clip scale-dependent nature of chart angles or unconcerned about its ramifications. My realisation of the Built-In flightiness of incline of line methods is precisely I've never been willing to pass five proceedings even five proceedings on Gann angles or the plant by the advocates of his methodology.

There you have got it.

Verdict: I wouldn't even look at it for an academic interest point. Never mind from a trading method. A complete waste material of your time, money and effort.

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